How will the postponement of the Olympics affect Japan’s economy?

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Japan and the International Olympic Committee today announced the postponement of the Summer Olympics, which was scheduled in Tokyo this year, against the backdrop of the emerging Corona virus, in a move likely to have major repercussions on the third largest economic power in the world.
Opinions differ on the issue in the absence of reliable figures, but experts agree on one thing: with or without the Olympics, the biggest danger facing Japan’s economy this year is the spread of the Corona virus, with all its consequences.

How much did the Olympics cost Japan?
By the end of 2019, the organizers estimated the total cost of the Olympics at 1.35 trillion yen ($ 12.6 billion).

However, the actual cost incurred by the country has long been the subject of debate, as the audit report indicated that government spending from its victory in hosting the games in 2013 to 2018 amounted to 1.06 trillion yen, which is much more than expected for this period.

Japanese companies also contributed to pumping money through sponsorship contracts, spending 348 billion yen (3.3 billion dollars).

Which sectors will be affected?
The delay will reflect a decline in tourism as well as overall consumption in the country already suffering from pressure after the sales tax hike that sparked controversy last year.

Even before the outbreak of the Coruna virus, the tourism sector was negatively affected, against the backdrop of a diplomatic dispute with South Korea, which sparked calls for a boycott between the two countries. Tourists from Korea are the second largest group to visit Japan from one country, after Chinese tourists.

Japan has a diversified industrial economy, and does not rely heavily on tourism, but with already weak domestic spending, the Olympics delay may affect domestic purchases.

So far, 4.5 million tickets have been sold, and the number is expected to reach 7.8 million, 20 to 30 percent of them internationally.

In 2018, the Japanese Minister of Tourism expected that 600,000 foreign people will come to the country to watch the Olympic Games.

Economists believe that the postponement of the Olympics and the continued spread of the virus will lead to a contraction of the gross domestic product by about six billion dollars.





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